Mobile phone operators could be forced to offer separate deals for use of their networks and for handsets, following claims that consumers are being over-charged.

The Government is to act after industry watchdog Ofcom says one million people are currently paying higher bills than they should be.

Culture Minister Margot James said: "That is far too great a scale of consumer detriment for us to live with."

Some operators offer "bundles" which include both the cost of a new phone, with payments spread out over 12 or 18 months, along with use of their network, which can include voice calls, internet access and text messaging.

It means that bills should fall significantly - for anyone who sticks with their existing handset- after all the payments on the phone have been made.

(Image: PA)

But Ministers say they are determined to take action because some customers simply keep on paying the same amount.

The problem is partly that some customers don't realise there are two separate parts to the bills they are paying.

Black Country MP Ms James, a Minister in the Department for Culture, Media and Sport, said: "Ofcom estimates that about 1 million people continue to pay the full monthly charge after the end of their contract rather than switching to a cheaper deal, and that those people could collectively be overpaying by £130 million per year

“It represents too many people paying more than they need to, by continuing to pay for the cost of a mobile handset when they should no longer be doing so - essentially after they have paid for it.”

She said the Government would consider whether mobile phone operators should be forced to publish the cost of a handset and the cost of using the network separately.

Measures could be included in a Green Paper on consumer protection to be published for consultation later in the year.

She said: “I am aware that some stakeholders would like to see the end of bundled mobile phone contracts, and want all contracts to be split, with the cost of the handset split out from the cost of services.

“The pricing of split contracts can be more transparent for consumers than bundled contracts, although split contracts are not without consumer issues.

“At the moment, providers can make a commercial decision to offer split or bundled contracts, or a choice.”